Fitch puts Israel's credit rating on negative watch

International credit rating agency Fitch Ratings has placed Israel’s “A+” credit rating on negative watch due to geopolitical risks. Fitch announced that the geopolitical risks arising from the Israeli-Palestinian conflict were influential in placing Israel’s long-term local and foreign currency credit rating on negative watch. The statement noted that the negative watch reflects the risk of the current conflict expanding to include large-scale military clashes with multiple actors over a long period of time, and that other organizations and countries in the region could also be involved in the conflict. The statement emphasized that an expansion of this scale in the conflict could lead to significant additional military spending, destruction of infrastructure, and permanent changes in consumer and investment confidence, in addition to human losses, and thus cause a major deterioration in Israel’s credit metrics. The statement warned that a significant escalation of the conflict, which would have a material and long-term impact on the economy and public finances, could lead to a downgrade in the country’s credit rating, and that a decrease in the conflict could also have a positive effect on the country’s rating.